The warning signals have always been there. Goldman Sachs consistently warned the New Zealand government that the country has the most overvalued housing market among all G10 nations. They have said that the market is at risk of a collapse and that prices could go down by as much as 5 percent in the near future.

The Goldman Sachs made use of three different standard metrics to come to this conclusion. They examined the home price levels such as the ratio of home prices to rent and the ratio of home prices to household income. They also measured the home prices adjusted for inflation.

Having done that, they came to the conclusion that New Zealand had the priciest housing market among developed nations, and that homes here were pricier than those in Canada, Sweden and Australia. They have also predicted that there was a 40 percent likelihood of the New Zealand housing market going bust in 1-2 years.

What has the New Zealand government been doing to prepare the country for such an eventuality? Not much, unfortunately. But they have been considering raising the interest rates. This is not so easy.

The Reserve Bank stress-tested the ability of mortgage seekers to cope with rates at 7 percent. This is about the same as the average two-year mortgage rate over the last 10 years. It found that 4% of all borrowers, and 5% of recent borrowers would be put under a lot of stress if there was an increase in interest rates, which is a measure the government has been contemplating to avert a housing collapse.

Reserve Bank Governor Graeme Wheeler said in an interview with Radio New Zealand, "I could certainly imagine a situation where you're starting to see some significant decline in house prices in part of a city that start to have broader contagion effects elsewhere."

Grant Spencer, another top Reserve Bank official said, "If you look at any market or banking collapse, if you start to get numbers over 5 percent it tends to have systemic effects and serious effects."

Bernard Hodgetts, the Reserve Bank head of macro finance added that any stress on the borrowers will have a knock on effect on the housing market. He said, "Those effects, clearly, do have the potential to accumulate. So that if a downturn comes, you don't get a whole lot of forced sales coming onto the market that depresses house prices even further, and create a risk for the banking system and also the broader economy."

So if you have a property for sale in New Zealand, it is important to hurry up and hire the right overseas property expert to get it off your hands as early as possible. Don’t waste too much time in wondering what could happen – the time to act is now.